52. Financial scenarios

There is a split (there are actually several) between those who thing the economy needs to resurrect the banks and return to a credit-debt economy, and those who would rather reign in the banks and shift innovation back to a more thing based economy.

The politics here is also split. the first group tend to support Obama/Geithner/Summers/and Rubin (?). whereas the second group is more skeptical and would like to see the power shift away from finance and the tto big to fail banks.

Which is happening? Evidence. I’ll try to follow the trail.

For example, Roubini, closely watched, says (through calculated risk)

Professor Roubini writes: Stress Testing the Stress Test Scenarios: Actual Macro Data Are Already Worse than the More Adverse Scenario for 2009 in the Stress Tests. So the Stress Tests Fail the Basic Criterion of Reality Check Even Before They Are Concluded

[I]f you look at the actual data today macro data for Q1 on the three variables used in the stress tests – growth rate, unemployment rate, and home price depreciation – are already worse than those in FDIC baseline scenario for 2009 AND even worse than those for the more adverse stressed scenario for 2009. Thus, the stress test results are meaningless as actual data are already running worse than the worst case scenario.